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Mapleton announces new approach to financing water, wastewater infrastructure renewal

by Aryn Strickland

MAPLETON - The township is inviting companies with applicable experience to apply to a Request for Qualifications (RFQ) and invest in the township’s water and wastewater systems.

Council passed a motion to begin the RFQ process on April 2.

Mayor Gregg Davidson and CAO Manny Baron say it’s an innovative financing approach that could help the township avoid municipal tax increases and save ratepayers money.

“For communities such as ours, this kind of concession agreement might be the only way we can pay a [$15 million to $30 million] program over a 20-year span because we know that the [funding] coming from the federal and the provincial government are drying up,” said Davidson.

 “We have to look (for) alternative ways of funding besides going to the taxpayer and asking them to help us raise that money.”

The ideal investor, he said, is a company with experience not only operating municipal water systems but also designing, building and financing new water and wastewater infrastructure, including a new water tower.

The new approach would also save time, according to Baron, starting with speeding up the selection process.

If council decides the companies that respond to the RFQ meet its qualification requirements, it will initiate a competitive Request for Proposals (RFP) to begin narrowing down the selection process.

“We sent [the RFQ] out to ensure that we are allowed to pick and choose from those qualifications to make sure that the company that we do send the RFP to is qualified,” Baron said.

However, the motion also stipulates the township is not obligated to accept any proposal if all submissions  are found to be inappropriate.

The township will take advice from auditor organization Price-waterhouseCoopers while reviewing submissions.

“We don’t want to waste anybody’s time; we don’t want ABC water services from just anywhere to fill out a Request for Proposal and then we have to go through that and the next thing you know, they are just not up to par,” Baron said.

Though the township is seeking an investor to finance and design infrastructure improvements, both Baron and Davidson said the township would continue to own the water and wastewater systems.

“We own all the assets; the ability to set rates belongs to us, so much like now if we want to do a wastewater rate study, we will do the exact same thing based on the amount of money that we need to invest. There [would be] no power struggle there at all,” said Baron.

The major draw for companies would be the return on its investment, tax write-offs and collections on operating fees across two decades under a 20-year concession arrangement.

Though Mapleton currently has an agreement with OCWA to operate its water and wastewater systems, the new approach will extend the agreement to make room for capital investments.

“There would be a rate of return obviously for [the  successful applicant’s] investment, but there is also the opportunity for them to make money if they operate it, so there is an operating fee that goes yearly that we pay OCWA right now, and from what they invest to what they charge there is a threshold there that they can make money on,” explained Baron.

While it is relatively rare in Ontario for outside companies to invest and operate municipal wastewater systems, the approach is not unheard of in other provinces.

“It’s something that is done out west and in western Canada. You have companies out there that have been doing the wastewater for communities for a number of years. It’s just not something that has been done in Ontario,” Davidson told the Wellington Advertiser.

Council and staff in Mapleton began looking for an alternative method of financing water and wastewater infrastructure renewal in December.

Already members of council have been in discussion with provincial ministries about the new approach.

“This is a huge step, not only for Mapleton but for communities like ours right across Ontario, and we have had a number of meetings with different provincial ministries who are interested in how we are going about raising additional capital,” said Davidson.

However, if an appropriate investor is not found, Davidson said the approach would be called off.

“At the end, council will either accept one of the proposals or we will deny all proposals ... we just want to go out there right now and see what is available and is it going to work for Mapleton,” he said. “We want to make sure that whatever we do is going to be in the best interest of our community over the next 20 years.”

April 10, 2019

 
 

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